By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all

First quarter of 2023 was very exciting for Gold and Silver with prices closing near record high levels around Rs 60000 and Rs 72000 respectively. In FY 2022-23, Gold prices rose more than 15% from Rs 51500 to Rs 60000, while Silver prices had W-shaped recovery. Gold and Silver prices were well supported by easing inflationary pressure, dovish monetary policy and US recession fears.

The preliminary PCE price index data released this week showed a slight decrease to 4.6% YoY in February, down from 4.7% in January. The market reaction has been for US Treasury yields to fall, the US Dollar to weaken, and the gold price to rise. The lower-than-expected inflation data increases the likelihood that the FED will do nothing at its May meeting and may even cut rates later in the year.

The March failures of two US regional banks and a major Swiss bank demonstrate that the effects of monetary tightening take time to filter through the economy and that the vulnerabilities associated with an aggressive tightening phase frequently manifest themselves in unexpected places. The issue now is with small banks, which are no longer so small. Small banks now have a combined asset base of $7 trillion. While the United States government and the Federal Deposit Insurance Corporation (FDIC) have stepped in to guarantee all depositors’ funds held in banks, the quality of assets held by banks remains a concern.

The FED raised rates after 14 years by 500 basis points in 12 months, resulting in economic detriment and bond losses. As the banking crisis threatens to plunge the global economy into a deep recession, gold and bonds remain two of his top investments for 2023. The gold market will continue to be well supported and should eventually sustain above $2000/oz (Rs 60000/10 gm), as the worst banking crisis since the 2008 Great Financial Crisis is far from over.

Furthermore, credit availability is dwindling, inflation remains high, and the United States is on the verge of a recession. When the banking crisis resurfaces in coming weeks, the price of gold will rise above $2100/oz (Rs 62000/10 gm) as people seek safety.

Silver, which is called poor cousin of gold has been rising continously from in March. Silver demand should benefit from the adoption of 5G technologies, electric vehicles, and the solar energy sector. Silver is expected to touch Rs 73000 and Rs 75000 very soon. So the best way to stay invested in this market is through Digi gold SIP and Digi Silver SIP through Augmont- Gold for All.

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